Analysis | Funding Education Technology in India

December 9, 2015

By Zenobia Sethna

Indians spend a fortune on education and yet the massively fragmented business of education has left investors scratching their heads. What bets might work? What sectors are avoidable? Who is taking the bets and who might prevail?

As with any product or service, it is the quality of the education that will determine scalability and longevity in this sector. In this regard, Indian EdTech companies are lagging behind their global counterparts in terms of innovative solutions to engage learners, reach a wider audience and keep costs down.

Education technology start-ups are seeing a spate of investor activity over the past few months with top venture capital firms validating their growth potential. Interestingly, although the total amount invested in 1H 2015 seems to be significantly lower with $56 million than it was in 1H 2014 ($80 million), we see a much larger number of investors (60) being drawn to EdTech in India than in 2014 (35), and it is worth mentioning we saw one $60 million round in 2015.

While an increasing number of private institutions and start-ups are stepping in to fill the void, relatively few are focused on the area with greatest potential impact: low-cost private education solutions for students living at the Bottom of the Pyramid. Gender inclusiveness is another great hurdle that EdTech needs to address: Just 26% of those who enroll in Coursera classes from India are women.

In the education technology arena, online test preparation is among the fastest growing segment, and has been getting substantial venture capital interest. K12 education (primary and secondary education) is a large space but serviced by individual teachers, making it a hard model to scale and one that needs a player who can democratise education in India. It is therefore heartening to know that in terms of funding popularity in India in 2015, we see the K-12 vertical lead the field with 11 rounds of funding, followed by Higher Education.

Keeping learners engaged and motivated will be crucial, and low completion rates for MOOCs is indicative of that. This is where Technology can step in with mobile, social, game based learning that offer adaptive teaching platforms, diagnostic tools and online touch points for social interaction.